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Comprehensive energy bills introduced in the house and Senate dodge the tough issues

On July 22, 2015, the leadership of the Senate Energy and Natural Resources Committee and the House Energy and Commerce Committee introduced bipartisan energy bills that address a broad range of important issues. While the bills reflect compromise on a range of significant energy issues, they leave the hardest and most contentious issues for later. Both bills are the result of months of negotiations, but they fail to address a number of controversial energy policy issues such as construction of the Keystone Pipeline and the repeal of the 40 year ban on domestic oil exports. It has been eight years since a comprehensive energy bill passed Congress, primarily because energy policy decisions have been entangled in partisan politics, regional differences, and other unrelated issues.

Senate Energy Bill

During the last week of July, the Senate Energy and Natural Resources Committee held a three-day markup to review their bipartisan energy bill. The Energy Policy Modernization Act of 2015 includes five titles focusing on a wide range of energy issues, including energy efficiency, infrastructure, supply, accountability, and conservation.

The bill includes a number of energy efficiency measures; the Department of Energy's ("DOE") loan guarantee program; modernizing the electric grid; re-defining DOE's responsibilities in cybersecurity; permanently reauthorizing the Land and Water Conversation Fund; and restating Federal Energy Regulatory Commission's ("FERC") role in hydropower permitting. The legislation firmly underscores the committee's position that the Strategic Petroleum Reserve only be used to pay for upkeep and improvements of the reserves.

Key provisions in the legislation target the liquid natural gas ("LNG") industry. The bill would speed decision-making on LNG exports by requiring DOE to approve or deny applications to export LNG to non-free trade agreement ("FTA") countries within 45 days of final action at FERC or the Maritime Administration. Currently, DOE quickly approves applications to FTA countries, and while DOE has as of late issued non-FTA approvals within days of FERC wrapping up its rehearing process, that has not always been the case. This issue remains controversial and will be contested when the legislation is debated on the Senate floor.

The bill also provides for expedited review of legal challenges to LNG facilities, and would change the Natural Gas Act to require public disclosure of where exported LNG is headed.

A number of provisions are welcomed by the renewable industry. For the geothermal industry, the bill sets a 50,000-MW geothermal goal, directs federal agencies to identify areas for development and allows federal oil and gas lease holders to obtain a geothermal lease to encourage production.

The Energy Policy Modernization Act was approved by the committee by a vote of 18-4, with 10 Republicans and eight Democrats voting in support. Debate over the most contentious issues that were not included in the bill will surely return, by way of amendments, when the legislation reaches the Senate floor. Because of Senate rules and partisanship, final passage of the bill is far from certain.

In another bill, the committee also passed, by a highly partisan vote, legislation to end the 40-year-old ban on exporting crude oil and expand areas of offshore drilling. An attempt will likely be made on the Senate floor to add this provision to the comprehensive energy bill.

House Energy Bill

In the House, Republican members of the Energy and Commerce Committee introduced their own energy bill, which has received approval from the Energy and Power Subcommittee. While it is a more modest bill than its Senate counterpart, it does address many of the same issues that are included in the Senate bill and, as written, will have Democratic supporters. Like the Senate bill, it too avoids the most difficult issues such as the ban of oil exports and the Keystone Pipeline. Senior Republicans conceded that the legislation only includes non-controversial matters. Democrats called it weak and incomplete. Members of the committee are working over the August recess to develop a more comprehensive bill.

The legislation does address a number of issues critical to improving the infrastructure and delivery of natural gas such as speeding the permitting process for interstate natural gas pipelines. The bill commissions a study to improve and build new energy infrastructure for natural gas pipelines and transmission lines and more efficient ways to connect renewable power to the grid.

The bill focuses on the security and reliability challenges to the electric grid. It grants the Secretary of Energy emergency authority to act in case the grid is in danger of security threats such as a cyber-attack. In addition, the legislation gives electric companies permission to violate environmental laws in case of an emergency and to maintain reliability.

What's Next

In the Senate, the real debate over the legislation begins on the Senate floor, when controversial amendments will be offered to approve the Keystone pipeline and the oil export ban.

In the House, the full Energy and Commerce Committee will consider their legislation when Congress returns from the August recess.

The good news about both bills is that they address a wide range of energy policy issues that are important to modernizing, streamlining and protecting the nation's energy infrastructure. There is strong bipartisan agreement that these energy policy provisions are necessary and important. The disappointing news is that the bills fail to address some of the most critical and contentious energy policy issues. If politics really is the "art of the possible," both bills, as introduced, may meet that test. But this stage is only the first round of a much more contentious debate to be held in the fall.

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